Spain's public deficit target for 2013 reached by July

Source: El Pais - Tue 30th Jul 2013

The public deficit of the Spanish central government in the first half of the year is already at the target for the full year of 3.8% of GDP, according to figures released Tuesday by the Finance Ministry.

The European Commission set a target for the shortfall in the country's finances of 6.5% of GDP for the whole of the country's public administrations. This figure includes a deficit for the regions of 1.3% of GDP and of 1.4% for the Social Security system.

Finance Minister Cristóbal Montoro noted that in national accounting terms the shortfall in the central government's first-half books was below the 4.15% of GDP in the same period a year earlier. He attributed this to tax hikes approved last year and a relative improvement in the economy, which boosted revenues by 4.6% in the period.

In a parallel development, the National Statistics Institute (INE) on Tuesday confirmed an earlier estimate by the Bank of Spain that the economy contracted by only 0.1% in Q2 on a quarterly basis after a decline of 0.5% the previous 3 months. On an annual basis, GDP shrank by 1.7% after falling 2.0% in the first quarter.

Commenting on the figures, the secretary of state for the economy, Fernando Jiménez Latorre, said the figures represented a "turning point" in the economy that would be maintained in the coming quarters. "The recovery is underway," he said.